General Facts

Japan has one of the most advanced healthcare systems and is the world’s third largest market for prescription medicines, after the United States and China. In 2015, prescription drug turnover at National Health Insurance prices was $104.6 billion (IMS Japan).

The current national pharmaceutical expenditure is around 2% of GDP (OECD), which is above regional and global averages, and is expected to increase 5-fold by 2020, primarily driven by universal health coverage for 127 million citizens, the aging population and traditional high use of medicines.

Japan remains one of the most lucrative markets, even with downward price pressures. All approved drugs are reimbursed and in the absence of patent protection, 8 years exclusivity is granted to newly approved drugs. However, the government has adopted certain cost containment measures such as the promotion of generic drugs and biennial drug pricing revisions.

The enforcement of both the price revision and premium price systems for innovative drugs is driving local companies to increase their R&D spending efforts. This is simultaneously accelerating demand for products and technologies licensed from abroad.

As drug development timelines are longer in Japan, companies should start clinical development in this territory as soon as possible. Many companies are currently integrating Japan into their global development strategies.